Line 24-Taxable Income Before Deduction for Dividends Paid

At-risk rules.   Generally, special at-risk rules under section 465 apply to closely held funds engaged in any activity as a trade or business or for the production of income. These funds may have to adjust the amount on line 24.

The at-risk rules do not apply to:

• Holding real property placed in service by the fund before 1987;
• Equipment leasing under sections 465(c)(4), (5), and (6); and
• Any qualifying business of a qualified corporation under section 465(c)(7).

However, the at-risk rules do apply to the holding of mineral property. For more information, see section 465 and Form 6198, At-Risk Limitations.

Tax and Payments Line 28b-Estimated Tax Payments

Enter any estimated tax payments the fund made for the tax year.

Line 28f-Credit for Tax Paid on Undistributed Capital Gains

Enter the credit (from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains) for the fund's share of the tax paid by another RIC or a REIT on undistributed long-term capital gains included in the fund's income. Attach Form 2439 to Form 1120-RIC.

Line 28g-Credit for Federal Tax on Fuels

Complete and attach Form 4136, Credit for Federal Tax Paid on Fuels, if the fund qualifies to take this credit.

Line 28h

Add the amounts on lines 28d through 28g and enter the total on line 28h.

Backup withholding.   If the fund had income tax withheld from any payments it received, because, for example, it failed to give the payer its correct EIN, include the amount withheld in the total for line 28h. This type of withholding is called Backup Withholding. Show the amount withheld in the blank space in the right-hand column between lines 27 and 28h, and write Backup Withholding.

Line 29-Estimated Tax Penalty

A fund that does not make estimated tax payments when due may be subject to an underpayment penalty for the period of underpayment. Generally, a fund is subject to the penalty if its tax liability is $500 or more and it did not timely pay the smaller of:

• 100% of its alternative minimum tax minus the credit for Federal tax paid on fuels for 2002 as shown on the return or
• 100% of its prior year's tax.

See section 6655 for details and exceptions, including special rules for large corporations.

Use Form 2220, Underpayment of Estimated Tax by Corporations, to see if the fund owes a penalty and to figure the amount of the penalty. Generally, the fund does not have to file this form because the IRS can figure the amount of any penalty and bill the fund for it. However, even if the fund does not owe the penalty, the fund must complete and attach Form 2220 if:

• The annualized income or adjusted seasonal installment method is used or
• The fund is a large corporation computing its first required installment based on the prior year's tax. See the Instructions for Form 2220 for the definition of a large corporation.

If Form 2220 is attached, check the box on line 29, page 1, Form 1120-RIC, and enter the amount of any penalty on this line.

Schedule A

Deduction for Dividends Paid

Column (a) is used to determine the deduction for dividends paid resulting from ordinary dividends.

Column (b)   is used to determine the deduction for dividends paid resulting from capital gain dividends.

Do not include any amount reported for the tax year on Form 2438, line 9b. Section 561 (taking into account sections 852(b)(7), 852(c)(3)(B), and 855(a)) determines the deduction for dividends paid. Do not take into account exempt-interest dividends defined in section 852(b)(5). See Regulations section 1.852-11.

Line 3

Dividends, both ordinary and capital gain, declared and payable to shareholders of record in October, November, or December are treated as paid by the fund and received by each shareholder on December 31 of that calendar year provided that they are actually paid in January of the following calendar year. Enter on line 3 all such dividends not already entered on line 1 or 2.

Line 5

Enter the foreign tax paid deduction allowed as an addition to the dividends paid deduction under section 853(b)(1)(B). See the instructions for Item 10, Schedule K, on page 12, for information on the election available under section 853(a).

Schedule B

Income From Tax-Exempt Obligations

If, at the close of each quarter of the tax year, at least 50% of the value of the fund's assets consisted of tax-exempt obligations under section 103(a), the fund qualifies under section 852(b)(5) to pay exempt-interest dividends for the tax year.

Check the Yes box on line 1 of Schedule B and complete lines 2 through 5. See section 852(b)(5) for the definition of exempt-interest dividends and other details.

Schedule J

Tax Computation

Lines 1 and 2

Members of a controlled group.   A member of a controlled group, as defined in section 1563, must check the box on line 1 and complete lines 2a and 2b of Schedule J.

Line 2a.   Members of a controlled group are entitled to one $50,000, one $25,000, and one $9,925,000 taxable income bracket amount (in that order) on line 2a.

When a controlled group adopts or later amends an apportionment plan, each member must attach to its tax return a copy of its consent to this plan. The copy (or an attached statement) must show the part of the amount in each taxable income bracket apportioned to that member. See Regulations section 1.1561-3(b) for other requirements and for the time and manner of making the consent.

Unequal apportionment plan.   Members of a controlled group may elect an unequal apportionment plan and divide the taxable income brackets as they want. There is no need for consistency among taxable income brackets. Any member may be entitled to all, some, or none of the taxable income brackets. However, the total amount for all members cannot be more than the total amount in each taxable income bracket.

Equal apportionment plan.   If no apportionment plan is adopted, members of a controlled group must divide the amount in each taxable income bracket equally among themselves. For example, Controlled Group AB consists of Corporation A and Corporation B. They do not elect an apportionment plan. Therefore, each fund is entitled to:

• $25,000 (one-half of $50,000) on line 2a(1);
• $12,500 (one-half of $25,000) on line 2a(2); and
• $4,962,500 (one-half of $9,925,000) on line 2a(3).

Line 2b.   Members of a controlled group are treated as one group to figure the applicability of the additional 5% tax and the additional 3% tax. If an additional tax applies, each member will pay that tax based on the part of the amount used in each taxable income bracket to reduce that member's tax. See section 1561(a). If an additional tax applies, attach a schedule showing the taxable income of the entire group and how the fund figured its share of the additional tax.

Line 2b(1).   Enter the fund's share of the additional 5% tax on line 2b(1).

Line 2b(2).   Enter the fund's share of the additional 3% tax on line 2b(2).

Line 3a

Note:   Members of a controlled group must attach to Form 1120-RIC a statement showing the computation of the tax entered on line 3a. You may use the Tax Computation Worksheet for Members of a Controlled Group on page 10 for this purpose.

The fund computes its investment company taxable income tax as follows:

1. A fund that is not a personal holding company and is in compliance with Regulations section 1.852-6 regarding disclosure of the fund's actual stock ownership (members of a controlled group should see the instructions above for lines 1 and 2) computes its tax using the Tax Rate Schedule on page 10.

   Tax Rate Schedule

   If the investment company taxable income (line 26, page 1) is:
   Over -	But not over -	Tax is:	Of the amount over -
   $0	$50,000	15%	$0
   50,000	75,000	$ 7,500 + 25%	50,000
   75,000	100,000	13,750 + 34%	75,000
   100,000	335,000	22,250 + 39%	100,000
   335,000	10,000,000	113,900 + 34%	335,000
   10,000,000	15,000,000	3,400,000 + 35%	10,000,000
   15,000,000	18,333,333	5,150,000 + 38%	15,000,000
   18,333,333	- - - - -	35%	0

   
   

2. A fund that is a personal holding company or that is not in compliance with Regulations section 1.852-6 is taxed at a flat rate of 35% on its investment company taxable income.

Tax Computation Worksheet for Members of a Controlled Group (keep for your records)

Note: Each member of a controlled group must compute the tax on its investment company taxable income using this worksheet (except funds that are personal holding companies or that are not in compliance with Regulations section 1.852-6, see item 2 of Line 3a above.)
1.	Enter investment company taxable income (line 26, page 1)
2.	Enter line 1 or the fund's share of the $50,000 taxable income bracket, whichever is less
3.	Subtract line 2 from line 1
4.	Enter line 3 or the fund's share of the $25,000 taxable income bracket, whichever is less
5.	Subtract line 4 from line 3
6.	Enter line 5 or the fund's share of the $9,925,000 taxable income bracket, whichever is less
7.	Subtract line 6 from line 5
8.	Multiply line 2 by 15%
9.	Multiply line 4 by 25%
10.	Multiply line 6 by 34%
11.	Multiply line 7 by 35%
12.	If the taxable income of the controlled group exceeds $100,000, enter this member's share of the smaller of: 5% of the taxable income in excess of $100,000, or $11,750. (See the instructions for line 2b above.)
13.	If the taxable income of the controlled group exceeds $15 million, enter this member's share of the smaller of 3% of the taxable income in excess of $15 million, or $100,000. (See the instructions for line 2b above.)
14.	Total. Add lines 8 through 13. Enter here and on line 3a, Schedule J

Line 3c-Alternative Minimum Tax (AMT)

Unless the fund is treated as a small corporation exempt from the AMT, it may owe the AMT if it has any of the adjustments and tax preference items listed on Form 4626. The fund must file Form 4626 if its investment company taxable income (or loss) and retained capital gains not designated under section 852(b)(3)(D) plus adjustments and tax preference items is more than the smaller of $40,000 or the fund's allowable exemption amount (from Form 4626). Get Form 4626 for details.

Exemption for small corporations.   A fund is treated as a small corporation exempt from the AMT for its tax year beginning in 2002 if that year is the fund's first tax year in existence (regardless of its gross receipts) or:

1. It was treated as a small corporation exempt from the AMT for all prior tax years beginning after 1997 and
2. Its average annual gross receipts for the 3-tax-year period (or portion thereof during which the fund was in existence) ending before its tax year beginning in 2002 did not exceed $7.5 million ($5 million if the fund had only 1 prior tax year).

Line 3d

Deferred tax under section 1291.   If the fund was a shareholder in a passive foreign investment company (PFIC), and the fund received an excess distribution or disposed of its investment in the PFIC during the year, it must include the increase in taxes due under section 1291(c)(2) in the total for line 3d, Schedule J. On the dotted line to the left of line 3d, Schedule J, write Section 1291 and the amount.

Do not include on line 3d any interest due under section 1291(c)(3). Instead, show the amount of interest owed in the bottom margin of page 1, Form 1120-RIC, and write Section 1291 interest. For details, see Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.

Additional tax under section 197(f).   A fund that elects to pay tax on the gain from the sale of an intangible under the related person exception to the anti-churning rules should include any additional tax due under section 197(f)(9)(B) in the total for line 3d. On the dotted line to the left of line 3d, write Section 197 and the amount. For more information, see Pub. 535.

Line 4a-Foreign Tax Credit

To find out when a fund can take this credit for payment of income tax to a foreign country or U.S. possession, see Form 1118, Foreign Tax Credit-Corporations. The fund may not claim this credit if an election under section 853 was made for the tax year. See Item 10, Schedule K, on page 12.

Line 4b

If the fund can take either of the following credits, check the appropriate box(es) and include the amount of the credits in the total for line 4b.

Nonconventional source fuel credit.   A credit is allowed for the sale of qualified fuels produced from a nonconventional source. Section 29 contains a definition of qualified fuels, provisions for figuring the credit, and other special rules. Attach a separate schedule to the return showing the computation of the credit.

Qualified electric vehicle credit.   Use Form 8834, Qualified Electric Vehicle Credit, if the corporation can claim a credit for the purchase of a new qualified electric vehicle. Vehicles that qualify for this credit are not eligible for the deduction for clean-fuel vehicles under section 179A.

Line 4c-General Business Credit

Enter on line 4c the fund's total general business credit.

If the fund is filing Form 8844, Empowerment Zone and Renewal Community Employment Credit, or Form 8884, New York Liberty Zone Business Employee Credit, check the Form(s) box, write the form number in the space provided, and include the allowable credit on line 4c.

If the fund is required to file Form 3800, General Business Credit, check the Form 3800 box and include the allowable credit on line 4c. If the fund is not required to file Form 3800, check the Form(s) box, write the form number in the space provided, and include on line 4c the allowable credit from the applicable form listed below.

• Investment Credit (Form 3468).
• Work Opportunity Credit (Form 5884).
• Credit for Alcohol Used as Fuel (Form 6478).
• Credit for Increasing Research Activities (Form 6765).
• Low-Income Housing Credit (Form 8586).
• Orphan Drug Credit (Form 8820).
• Disabled Access Credit (Form 8826).
• Enhanced Oil Recovery Credit (Form 8830).
• Renewable Electricity Production Credit (Form 8835).
• Indian Employment Credit (Form 8845).
• Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips (Form 8846).
• Credit for Contributions to Selected Community Development Corporations (Form 8847).
• Welfare-to-Work Credit (Form 8861).
• New Markets Credit (Form 8874).
• Credit for Small Employer Pension Plan Startup Costs (Form 8881).
• Credit for Employer-Provided Child Care Facilities and Services (Form 8882).

Line 4d-Credit for Prior Year Minimum Tax

To figure the minimum tax credit and any carryforward of that credit, use Form 8827, Credit for Prior Year Minimum Tax - Corporations. Also see Form 8827 if any of the fund's 2001 nonconventional source fuel credit or qualified electric vehicle credit was disallowed solely because of the tentative minimum tax limitation. See section 53(d).

Line 6-Personal Holding Company Tax

A fund is taxed as a personal holding company under section 542 if:

• At least 60% of its adjusted ordinary gross income for the tax year is personal holding company income and
• At any time during the last half of the tax year more than 50% in value of its outstanding stock is owned, directly or indirectly, by five or fewer individuals.

See Schedule PH (Form 1120), U.S. Personal Holding Company (PHC) Tax, for definitions and details on how to figure the tax.

Line 7-Other Taxes

Include any of the following taxes and interest in the total on line 7. Check the appropriate box(es) for the form, if any, used to compute the total.

Recapture of Investment Credit

If the fund disposed of investment credit property or changed its use before the end of its useful life or recovery period, it may owe a tax. See Form 4255, Recapture of Investment Credit.

Recapture of Low-Income Housing Credit

If the fund disposed of property (or there was a reduction in the qualified basis of the property) for which it took the low-income housing credit, it may owe a tax. See Form 8611, Recapture of Low-Income Housing Credit.

Other

Additional taxes and interest amounts may be included in the total entered on line 7. Check the box for Other if the fund includes any of the taxes and interest discussed below. See How to report, below, for details on reporting these amounts on an attached schedule.

Recapture of qualified electric vehicle (QEV) credit.   The fund must recapture part of the QEV credit it claimed in a prior year, if within 3 years of the date the vehicle was placed in service, it ceases to qualify for the credit. See Regulations section 1.30-1 for details on how to figure the recapture.

Recapture of Indian employment credit.   Generally, if an employer terminates the employment of a qualified employee less than 1 year after the date of initial employment, any Indian employment credit allowed for a prior tax year because of wages paid or incurred to that employee must be recaptured. For details, see Form 8845 and section 45A.

Recapture of New Markets Credit   (see Form 8874).

Interest due on:  

• Deferred tax attributable to (a) installment sales of certain timeshares and residential lots (section 453(l)(3)) and (b) certain nondealer installment obligations (section 453A(c)).
• Deferred gain (section 1260(b)).

Built-in gains tax.   If a C corporation elected to be taxed as a RIC for a tax year beginning after January 1, 2002, or transferred property in a carryover basis transaction to a RIC on or after January 2, 2002, the RIC is subject to the built-in gains tax under section 1374 unless the C corporation elects deemed sale treatment on the transferred property. If the C corporation does not make this election, the RIC must pay tax on any built-in gain during the 10-year period beginning on its first day as a RIC or the day it acquired the assets in a carryover basis transaction. Recognized built-in gains and losses on which a fund pays tax generally retain their character (e.g., ordinary income or capital gain) and are treated the same as other gains or losses of the fund. The fund's tax on net recognized built-in gain is treated as a loss sustained by the fund after October 31 of the same tax year (see the instructions for line i of the Built-in Gains Tax Worksheet on this page). See Temporary Regulations section 1.337(d)-7T for details.

Different rules apply to elections to be a RIC and to transfers of property in a carryover basis transaction that occurred prior to January 2, 2002. For RIC elections and property transfers before this date, the C corporation is subject to deemed sale treatment on the transferred property unless the fund elects to pay tax on the built-in gain during the 10-year period. See Temporary Regulations section 1.337(d)-6T for information on how to make the election and figure the tax for RIC elections and property transfers before this date. The fund may also rely on Temporary Regulations section 1.337(d)-5T for RIC elections and property transfers that occurred before January 2, 2002.

Worksheet instructions. Complete the worksheet on this page to figure the built-in gains tax under Temporary Regulations section 1.337(d)-7T or 1.337(d)-6T.

Line a.   Enter the amount that would be the taxable income of the fund for the tax year if only recognized built-in gain, recognized built-in loss, and recognized built-in gain carryover were taken into account.

Line b.   Add the amounts shown on Form 1120-RIC, page 1, line 24; Form 1120-RIC, Part II, line 1; and Form 2438, line 11. For this purpose, refigure line 24 on page 1 of Form 1120-RIC without regard to any election under section 852(b)(2)(F). Enter the result on line b of the worksheet on this page.

Line c.   The fund's net unrealized built-in gain is the amount, if any, by which the fair market value of the assets of the fund at the beginning of its first RIC year (or as of the date the assets were acquired, for any asset with a basis determined by reference to its basis (or the basis of any other property) in the hands of a C corporation) exceeds the aggregate adjusted basis of such assets at that time.

Enter on line c the fund net unrealized built-in gain reduced by the net recognized built-in gain for prior years. See sections 1374(c)(2) and (d)(1).

Line d.   If the amount on line b exceeds the amount on line a, the excess is treated as a recognized built-in gain in the succeeding tax year.

Line e.   Enter the section 1374(b)(2) deduction. Generally, this is any net operating loss carryforward or capital loss carryforward (to the extent of net capital gain included in recognized built-in gain for the tax year) arising in tax years for which the fund was a C corporation. A capital loss carryforward must be used to reduce recognized built-in gain for the tax year to the greatest extent possible before it can be used to reduce the investment company taxable income.

Line h.   Credit carryforwards arising in tax years for which the fund was a C corporation must be used to reduce the tax on net built-in gain for the tax year to the greatest extent possible before the credit carryforwards can be used to reduce the tax on the investment company taxable income.

Line i.   The fund's tax on the net recognized built-in gain is treated as a loss sustained by the RIC after October 31 of the same tax year. Deduct the tax attributable to:

• Ordinary gain as a deduction for taxes on Form 1120-RIC, line 12.
• Short-term capital gain as a short-term capital loss on Schedule D (Form 1120), line 1.
• Long-term capital gain as a long-term capital loss on Schedule D (Form 1120), line 6.

How to report.   If the fund checked the Other box, attach a schedule showing the computation of each item included in the total for line 7, Schedule J; identify the applicable Code section and the type of tax or interest.

Line 8-Total Tax

Include any deferred tax on the termination of a section 1294 election applicable to shareholders in a qualified electing fund in the amount entered on line 8. See Form 8621, Part V, and How to report, below.

Subtract. Amounts to subtract from the total for line 8 are the deferred taxes on the fund's share of the undistributed earnings of a qualified electing fund (see Form 8621, Part II).

How to report.   Attach a schedule showing the computation of each item included in, or subtracted from, the total for line 8. On the dotted line next to line 8, enter the amount of tax or interest, identify it as tax or interest, and specify the Code section that applies.

Built-in Gains Tax Worksheet (keep for your records)

a.	Excess of recognized built-in gains over recognized built-in losses	a.
b.	Taxable income	b.
c.	Enter the net unrealized built-in gain reduced by any net recognized built-in gain for all prior years	c.
d.	Net recognized built-in gain (enter the smallest of lines a, b, or c)	d.
e.	Section 1374(b)(2) deduction	e.
f.	Subtract line e from line d. If zero, enter -0- here and on line i	f.
g.	Enter 35% of line f	g.
h.	Business credit and minimum tax credit carryforwards under section 1374(b)(3) from C corporation	h.
i.	Tax. Subtract line h from line g (if zero or less, enter -0-). Enter here and include on line 7 of Schedule J (see instructions)	i.

Schedule K

Other Information

The following instructions apply to questions 1 through 11 on page 3, Form 1120-RIC. Complete all the questions that apply to the fund.

Question 3

Check the Yes box for question 3 if the fund is a subsidiary in a parent-subsidiary controlled group (defined below). This applies even if the fund is a subsidiary member of one group and the parent corporation of another.

Note:   If the fund is an excluded member of a controlled group (see section 1563(b)(2)), it is still considered a member of a controlled group for this purpose.

Parent-subsidiary controlled group.   The term parent-subsidiary controlled group means one or more chains of corporations connected through stock ownership (section 1563(a)(1)). Both of the following requirements must be met:

1. At least 80% of the total combined voting power of all classes of voting stock entitled to vote or at least 80% of the total value of all classes of stock of each corporation in the group (except the parent) must be owned by one or more of the other corporations in the group and
2. The common parent must own at least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of all classes of stock of one or more of the other corporations in the group. Stock owned directly by other members of the group is not counted when computing the voting power or value.

See section 1563(d)(1) for the definition of stock for purposes of determining stock ownership above.

Question 5

Check the Yes box if one foreign person owned at least 25% of (a) the total voting power of all classes of stock of the fund entitled to vote or (b) the total value of all classes of stock of the fund.

The constructive ownership rules of section 318 apply in determining if a fund is foreign owned. See section 6038A(c)(5) and the related regulations.

Enter on line 5b(1) the percentage owned by the foreign person specified in question 5. For line 5b(2), write the name of the owner's country.

Note:   If there is more than one 25%-or-more foreign owner, complete lines 5b(1) and 5b(2) for the foreign person with the highest percentage of ownership.

Foreign person.   The term foreign person means:

• A foreign citizen or nonresident alien.
• An individual who is a citizen of a U.S. possession (but who is not a U.S. citizen or resident).
• A foreign partnership.
• A foreign corporation.
• Any foreign estate or trust within the meaning of section 7701(a)(31).
• A foreign government (or one of its agencies or instrumentalities) to the extent that it is engaged in the conduct of a commercial activity as described in section 892.

Owner's country.   For individuals, the term owner's country means the country of residence. For all others, it is the country where incorporated, organized, created, or administered.

Requirement to file Form 5472.   If the fund checked Yes, it may have to file Form 5472. Generally, a 25% foreign-owned corporation that had a reportable transaction with a foreign or domestic related party during the tax year must file Form 5472.

See Form 5472 for filing instructions and penalties for failure to file.

Item 8

Show any tax-exempt interest received or accrued. Include any exempt-interest dividends received as a shareholder in another mutual fund or other regulated investment company.

Item 10

Election under section 853(a).   A fund may make an irrevocable election under section 853(a) to allow its shareholders to apply their shares of the foreign taxes paid by the fund either as a credit or a deduction. If the fund makes this election, the amount of foreign taxes it paid during the tax year may not be taken as a credit or a deduction on Form 1120-RIC, but may be claimed on Form 1120-RIC, Schedule A, line 5, as an addition to the dividends paid deduction.

Eligibility.   To qualify to make the election, the fund must meet the following requirements.

• More than 50% of the value of the fund's total assets at the end of the tax year must consist of stock or securities in foreign corporations.
• The fund must meet the holding period requirements of section 901(k) with respect to its common and preferred stock. If the fund fails to meet these holding period requirements, the election that allows a fund to pass through to its shareholders the foreign tax credits for foreign taxes paid by the fund is disallowed. Although the foreign taxes paid may not be taken as a credit by either the fund or the shareholder, they are still deductible at the fund level.

To make a valid election, in addition to timely filing Form 1120-RIC and checking the box for line 10, the fund must file:

• Form 1099-DIV and Form 1096, including the statement required by Regulations section 1.853-4; and
• Form 1118, modified to become a statement supporting the fund's election.

Notification.   If the fund makes the election, it must furnish to its shareholders a written notice designating the shareholder's share of foreign taxes paid to each country or possession and the share of the dividend that represents income derived from sources within each country or possession. The notice must be mailed to the shareholders no later than 60 days after the end of the fund's tax year.

For further information, see Regulations section 1.853-4.

Schedule L

Balance Sheets per Books

The balance sheet should agree with the fund's books and records. Include certificates of deposit as cash on Schedule L, line 1.

Line 4- Tax-Exempt Securities

Include on this line:

1. State and local government obligations, the interest on which is excludible from gross income under section 103(a) and
2. Stock in another mutual fund or other RIC that distributed exempt-interest dividends during the tax year of the fund.

Line 24- Adjustments to Shareholders' Equity

Some examples of adjustments to report on this line include:

• Unrealized gains and losses on securities held available for sale.
• Foreign currency translation adjustments.
• The excess of additional pension liability over unrecognized prior service cost.
• Guarantees of employee stock (ESOP) debt.
• Compensation related to employee stock award plans.

If the total adjustment to be entered on line 24 is a negative amount, enter the amount in parentheses.

Schedule M-1

Reconciliation of Income (Loss) per Books With Income per Return Line 5d-Travel and Entertainment

Include on line 5d any of the following:

• Meals and entertainment not deductible under section 274(n).
• Expenses for the use of an entertainment facility.
• The part of business gifts over $25.
• Expenses of an individual over $2,000, which are allocable to conventions on cruise ships.
• Employee achievement awards over $400.
• The cost of entertainment tickets over face value (also subject to the 50% limit under section 274(n)).
• The cost of skyboxes over the face value of nonluxury box seat tickets.
• The part of luxury water travel not deductible under section 274(m).
• Expenses for travel as a form of education.
• Other nondeductible travel and entertainment expenses.

For more information, see Pub. 542.

Line 7-Tax-Exempt Interest

Include as interest on line 7 any exempt-interest dividends received by the fund as a shareholder in a mutual fund or other RIC.

Paperwork Reduction Act Notice.

We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is:

Recordkeeping	57 hr., 9 min.
Learning about the law or the form	20 hr., 37 min.
Preparing the form	36 hr., 24 min.
Copying, assembling, and sending the form to the IRS	4 hr., 1 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Tax Forms Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. Do not send the tax form to this office. Instead, see Where To File on page 3.

Previous | First

Instructions Index | 2002 Tax Help Archives | Tax Help Archives | Home